A friend of mine asked me over the weekend why I hadn’t crunched the numbers on making money out of creating content for YouTube. After all I’d exposed the long tail of Blogging, eBooks, online games, iPhone Games, iPad Apps and Freemium Software. Why not YouTube?

The answer is simply that a. A part from the occasional success story in Mashable (Think Rebecca Black) there isn’t a lot of data around to qualify how robust or valuable the market for YouTube content really is and, b. having discovered a “Long Tail” pattern across all the other mobile and online media “Get Rich” schemes I suspect that creating YouTube videos would hardly prove to be the exception to the rule.

The probability of achieving success with YouTube is probably no greater or no worse than achieving success with blogging. In the end you are creating content for free under the expectation that it will generate an income stream from the advertising. This in turn is dependent upon both the amount of people (and bots) interested in watching your video and the level of involvement said traffic has with the ads Google has selected to put on the menu.

Either way if this is your first attempt at creating online content then the reality is you have chosen to invest your time and energy in a crap shoot. So the real question you should be asking yourself is what are the odds.

What is the probability of success?

If I go to the casino and head over to the roulette wheel I can get odds ranging from 2:1 to 37:1. If I put a $1 of my time and energy into number 1 on the roulette wheel I have a 1 in 37 (i.e. 0+ 36 numbers) chance of getting lucky for a payout of 35 to 1.

Go to the horse races you’ll see a similar spread of bets. For the more sophisticated “investor” come risk taker there is the share market where 30% of the top 500 companies disappear each decade but if you are lucky enough to invest in an Apple before the rest of the market the returns are very healthy. For the less sophisticated “investor” come risk taker there is the option of owning your own small business where the failure rate is estimated to be 99%. Then there are those who would like to make a living out of their hobby (For argument’s sake we’ll place the failure rate at 999%) . Then there are those who just enjoy having a hobby and have no interest in it generating an income stream.

I would suggest the vast majority of online aspirants be it blogging, apps or videos fall neatly into the last three categories.

So the simple reality is the overwhelming vast majority of people who create online content make either nothing or next to nothing from their efforts. In this context YouTube is no different to blogging or Apps. But again the same could be said for all those wannabe Dancers, Actors and Garage Bands. As they say “it’s a long road to the top if you wanna…..”

All this wannabe free activity in turn probably amplifies the length of the long tail across all of these online media sectors.

Having said that in each case study we have undertaken so far be it blogging, games or apps we have proven that the “putting advertising on the menu” approach for monetizing online media inevitably turns Analog Dollars into Digital Pennies. Or, put another way, there is significantly less being made at the top of tail in online media than what was being made at the top of the tail in good old fashion Analog Media… especially when it comes to TV.

If you need any further evidence of the gap between the two economies then consider this last year Google announced a $500 x 1,000 investment in new content and talent to promote participation in the YouTube Channel Partners Network. Now compare that to the average cost of a prime time TV commercial in the USA (i.e. $110,000). That’s right folks Google’s big investment in generating new the content for the YouTube network is less than what most advertisers will pay for 5 x 30 second spots during the evening news.

Put your ad spend on Glee or Desperate Housewives and you’re talking 2 ads.

Football? 1 Ad. So if you are asking the question can you make money being a YouTube producer these numbers pretty much provide the answer: Maybe you can make money…. but if you knew what you were doing wouldn’t you be doing it on broadcast or cable TV?

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